We expect sales of products like the Mac and iPad to decline year-over-year as the trend toward remote painting subsides and the broader iPad PC and tablet markets remain muted. For example, IDC reported that global PC shipments fell about 3% in the fourth quarter, and Apple’s Mac shipments are estimated to have decreased by 18. 4%. [1] However, iPhone sales are likely to prove a bit more resilient, given that this will be the first full quarter since the launch of the new iPhone 15 devices. Additionally, Apple is seeing traction in markets such as India, Indonesia and Turkey, where installment payment plans and smartphone trade-in systems are helping to drive demand. Apple’s virtual business is also expected to partly help Apple overcome a lull in its hardware business driven by emerging AppStore sales and better adoption of otherArray subscription. During Q4FY23, sales rose 16% to $22. 3 billion, returning to double-digit expansion, after single-digit expansion in the past two quarters. We also expect Apple’s gross margins to be resilient, thanks to a larger sales pool, a more favorable sales pool skewed toward premium products, and some cost savings as well.
Over the longer term, AAPL stock has seen incredibly strong gains of 45%, from $130 in early January 2021 to around $190 now, up to an increase of about 25% for the S.
We value Apple at about $178 per share, which is slightly below the market price. We think Apple’s valuation is a bit rich with the stock trading at about 27x 2024 consensus earnings, which is slightly high compared to historical levels. Moreover, revenue growth is also likely to remain in mid-single-digit levels over the next year, per consensus estimates. See our analysis of Apple Valuation for more details on what’s driving our price estimate for Apple and how it compares with peers.
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